EU climate policy may cost the steel industry 100 billion Euros

“The European steel industry is ready to support ambitious greenhouse gas reduction targets so that the EU can adequately contribute to global efforts in the fight against climate change. However, we are surprised that while the Commission has already proposed a unilateral 40% EU climate target for 2030 and a Market Stability Reserve to drive up costs to at least 40 Euros per tonne of CO2, it has so far not engaged in a focussed discussion about the level of safeguard measures needed for Europe’s globally competing foundation industries. Without such measures, the European steel industry alone may have additional costs of up to 100 billion Euros in the period from 2020 to 2030. None of our competitors outside the EU has to bear such costs,” says Gordon Moffat, director general of EUROFER.

At the EU summit in March 2014 the heads of state instructed the Council and the Commission to “rapidly develop measures to prevent potential carbon leakage in order to ensure the competitiveness of Europe's energy-intensive industries” and promised that their decision on the new climate and energy framework at their summit in October 2014 will provide “the necessary stability and predictability for its economic operators”.

Today is the deadline for stakeholders to submit answers to a public consultation of the European Commission on carbon leakage provisions for industry under the EU Emissions Trading System. Several thousand replies on the 24 questions are expected from businesses, NGOs, national authorities and citizens. However, among the 24 questions there is none about the level of safeguard measures needed.

Moffat: “We are concerned that the Commission’s climate policy department wants to avoid such a discussion at this stage. But there is still time to do so and present proposals to the heads of state at their EU summit in October. Predictability means to set the principles now for protection against carbon and investment leakage and therefore to preserve the foundation industries of Europe. What we need from the EU institutions and the heads of state is a clear commitment and instruction to the Commission that at the level of best performance in sectors at risk of carbon leakage there should be no direct costs or costs passed-through in electricity prices resulting from the EU’s climate policy for 2030.”

Represented by EUROFER, the European steel industry represents the world leader in its sector, producing on average 170 million tonnes of steel per year with direct employment of 350 thousand highly skilled people. More than 500 steel production and processing sites in 24 EU member states provide direct and indirect employment for millions of European citizens.